Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Price, preferred Growth rate Bond yield Flotation cost, preferred Price, common 158 45 40 35% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 8.00 $ 3.50 $ 105.00 98 88 $ 10.40 $ 78.00 Calculate the weighted average cost of capital for Digital Processing Incorporated Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Weighted Cost 5.20 % 8.33 X 11.50 25.03 %

Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Price, preferred Growth rate Bond yield Flotation cost, preferred Price, common 158 45 40 35% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 8.00 $ 3.50 $ 105.00 98 88 $ 10.40 $ 78.00 Calculate the weighted average cost of capital for Digital Processing Incorporated Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Weighted Cost 5.20 % 8.33 X 11.50 25.03 %

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 1Q: Define each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt,...

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Given the following information: Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate. Dividend, preferred $ 5.00 Dividend, expected common $ 5.50 Price, preferred $101.00 Growth rate Bond yield. 34% 4% 5% Flotation cost, preferred $5.20 Price, common $ 74.00 Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital 20% 70 10. Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Notice that this problem asks for the weighted costs. These are the unweighted costs times the weights. Like this: (ka)(wa) weighted cost of debt. Weighted Cost % 0.00%
Insight Ltd. has the following capital Structure & after-tax Cost for different sources of funds used: Source of Funds Amount After-tax Cost Debt 15,00,000 5 Pref. Shares 12,00,000 10 Eq. Shares Retained Earnings 18,00,000 12 15,00,000 11 You are required to Calculate Weighted Average COC.
Capital Structure components Debt (K) Weighted Cost Total Cost Weights 3.05 25% ? Common shares (K.) 7.15 55% ? Preferred Stock (K,) 9.33 20% ? Weighted Average FIND Cost of Capital
Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate Dividend, preferred 15% 45 40 35% $ 10.00 Dividend, expected common $ 5.50 Price, preferred $ 98.00 Growth rate 10% Bond yield 11% Flotation cost, preferred $ 8.20 $ 77.00 Price, common Calculate the weighted average cost of capital for Digital Processing Incorporated Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital Weighted Cost 7.15 11.14 X % 7.86 26.15 %
Given the following information: Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: 15% 45 40 Corporate tax rate 35% Dividend, preferred $ 10.00 Dividend, expected common $ 5.50 Price, preferred $ 98.00 Growth rate 10% Bond yield Flotation cost, preferred 11% $ 8.20 $ 77.00 Price, common Calculate the weighted average cost of capital for Digital Processing Incorporated Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital Weighted Cost 0.40% 0.15 0.45 1.00 %
Company Total assets Interest-bearing debt Average pre-tax borrowing cost Common equity: Book value Market value Income tax rate Market equity beta Risk free rate Market risk premium A 14000 2500 6.00% 3000 2500 35.00% 2.25 2.50% 4.50% B 110000 33000 4.00% 13000 110000 35.00% 0.75 2.50% 4.50% C 44000 18000 5.00% 14000 22000 35.00% 1.2 2.50% 4.50% [WD x RD * (1 - tax rate)] + [wPx RP] + [WE * RE] = 1 Compute the weighted average cost of capital (WACC) for Company A assuming a cost of equity capital of 12.63%. COST OF EQUITY 12.625 2 Compute the weighted average cost of capital (WACC) for Company B assuming a cost of equity capital of 5.88%. COST OF EQUITY 5.875 3 Compute the weighted average cost of capital (WACC) for Company C assuming a cost of equity capital of 7.90%. COST OF EQUITY 7.9
Given the following information: Percent of capital structure: Debt Preferred stock Common equity (retained earnings) Additional information: Bond coupon rate Bond yield to maturity Dividend, expected common Dividend, preferred Price, common Price, preferred Flotation cost, preferred Growth rate Corporate tax rate 40% 20 40 12% 10% $ 6.00 $ 13.00 $ 65.00 $ 122,00 $ 4.00 9% 30% Calculate the Hamilton Corporation's weighted cost of each source of capital and the weighted average cost of capital. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.
Jordan Manufacturing reports the following capital structure: Current liabilities P100,000 ; Long-term debt 400,000 ; Deferred income taxes 10,000 ; Preferred stock 80,000 ; Common stock 100,000 ; Premium on common stock 180,000 ; Retained earnings 170,000. What is the debt ratio? A. 0.48 B. 0.49 C. 0.93 D. 0.96
The company capital structure consists of debt 250000 at 0.076, preferred stock 230000 at 11% and common stock 120000 at 14%, calculate company's weighted average cost of capital Select one: O a. 0.0737 O b. All the given choices are not correct O c. 0.0316 O d. 0.0596 O e. 0.1017
Given the following information: Percent of capital structure: Debt Preferred stock Common equity (retained earnings) Additional information: Bond coupon rate Bond yield to maturity Dividend, expected common Dividend, preferred Price, common Price, preferred Flotation cost, preferred Growth rate Corporate tax rate 13% 11% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 7.00 $ 14.00 $ 70.00 $110.00 $ 2.50 30% 10% 5 85 Calculate the Hamilton Corp's weighted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost %
What is the weighted-average cost of capital for SKYE Corporation given the following information? Equity shares outstanding Stock price per share Yield to maturity on debt Book value of interest-bearing debt Coupon interest rate on debt. Interest rate on government bonds SKYE's equity beta Historical excess return on stocks Tax rate Note: Enter your answer to 1 decimal place. Weighted-average cost of capital % 1 million. $ 35 7.68% $14 million 9% 7% 0.75 7.0% 40%
6. Calculate and explain the Weighted Average Cost of Capital (WACC)based on the details below.a. Market Value of Equity: $7Mb. Market Value of Debt: $3Mc. Cost of equity 7%d. Cost of debt: 5%e. Tax Rate: 32 (use .32 for calculation)